The Collapse of Lehman Brothers ByNICK LIOUDIS On Sept. 15, 2008,Lehman Brothersfiled for bankruptcy. That name may bring up images millions of people saw in the news for the first time: Hundreds of employees, mostly dressed in business suits, leaving the bank's global offices one-by-one with bankers boxes in their hands. It was a somber reminder that nothing is forevereven in the richness of the financial and investment worlds. With $639 billion in assets and $619 billion in debt, Lehman's bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such asWorldComandEnron. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. Lehman's demise also made it the largest victim of the U.S. subprime mortgage-inducedfinancial crisisthat swept through global financial markets in 2008. Lehman's collapse was a seminal event that greatly intensified the 2008 crisis and contributed to the erosion of close to $10 trillion inmarket capitalizationfrom globalequity marketsin Oct. 2008the largest monthly decline on record at the time. In this article, we take a look at what happened that led to the collapse of the bank. Lehman's collapse roiled global financial markets for weeks, given the size of the company and its status as a major player in the U.S. and internationally. Many questioned the U.S. government's decision to let Lehman fail, compared with its tacit support for Bear Stearns, which was acquired by JPMorgan Chase (JPM) in March 2008. Lehman's bankruptcy led to more than $46 billion of itsmarket valuebeing wiped out. Its collapse also served as the catalyst for the purchase of Merrill Lynch by Bank of America in an emergency deal that was also announced on Sept. 15. After reading the above case study, answer the following questions: 

Q1.  Could the Fed save Lehman Brothers from bankruptcy? How? 

Q2.  Why Lehman brothers did not manage to survive the mortgage crisis though 

Q3.  they survived the great depression previously? 

Q4. In your opinion, can asymmetric problem be blamed (partially) for what happened? 

Q5.  Are rating agencies liable for the financial crisis? Explain. 

Q6. What effects had Government bailouts on the market during the crisis? Discuss

Answer rating: 100% (QA)

Q1 The Federal Reserve Fed could have attempted to prevent Lehman Brothers bankruptcy through several methods such as providing emergency loans or arranging a sale to another institution However the F... View the full answer